5% mortgage rates (again)

[Twiglets1]

Following on from the previous two of these threads both with 6% mortgage rates in the title, I think it's more realistic to return to 5% for this one.

According to this Rightmove article, the current average mortgage rate for a five-year fixed rate mortgage is 4.84%, up from 4.85% last week. The current average rate for a two-year fixed rate mortgage is 5.23%, which is unchanged from last week. The lowest available five-year fixed rate is 4.13%, and the lowest available two-year fixed rate is 4.46% – both unchanged from last week.

On 27th March, the average 5 year fixed rate mortgage for someone with a 60% LTV was 4.35%.
For someone with a 75% LTV it was 4.72% whereas 80% was 4.79%.

For someone with a 90% LTV it was 4.98% whereas 95% was 5.47%.

Two year fixed rate mortgages are slightly higher.

https://www.rightmove.co.uk/news/articles/property-news/current-uk-mortgage-rates/

My son has applied for a 3.69 five year. He was pleased because he's been looking for a house for 6 months and been working on the assumption it will be circa 4.5.

Looks like one building society senses the wind is changing.
‘The country’s second largest mutual lender, Coventry Building Society has broken ranks and is one of the first home lenders in recent weeks to raise mortgage rates, in what could be a sudden end to an interest rate cut war for market share.’

Lucky you had hindsight then, because I discussed that very thing with you on these forums before it happened. I explained why an inflation spike was coming and the causes when you we’re posting BoE media articles stating it wouldn’t.

I explained that rates would roughly get to the 5.5% mark (as that’s the max debt to GDP ratio) I then explained they would drop into global recessionary factors in which the banks would race to cut below 4% for custom in the expectation of a ‘soft landing’

I explained that this would be the window to fix below 4% for those that hadn’t fixed for 10 years in 2020 when I said to.

But after all that Im saying again that like the 70’s there will be a secondary inflation wave lead by energy/oil which is spiking again. The Fed cut by 0.50, and treasury yields are doing the opposite of what they are supposed to and are rising once more so the US 30 year mortgage rate is heading to the levels where it was at the beginning of the year.

Similar is going to happen here.

https://www.telegraph.co.uk./money/property/mortgages/lenders-raise-mortgage-rates-ahead-reeves-budget/

https://www.bbc.co.uk/news/articles/c93yenv5r74o

As the story says, swap rates are rising.

That's brilliant

Mortgage approved 5 years 3.69 (899/999 fee I think). 10 percent overpayment allowed.
Survey tomorrow.

Very good! 👍

Thank you for this thread!! I have been following with interest. Thanks to your updates we’ve just fixed 3.79 for 5 years.

Thank you @Buttons0522 & I’m glad you managed to fix at under 4% 😊

As the article explains, concerns about the upcoming Budget may be affecting swap rates. But in general the feeling is still that the direction of interest rates is likely to be downwards in the medium term.

https://x.com/barchart/status/1843762004076703849?s=46

Again domestic focus like government budgets doesn’t move treasury yield direction they are only catalysts.

The last narrative was that Liz Truss mini budget caused mortgage rates to rise when it wasn’t the cause at all. It was only a catalyst to already rising yields. Same with this budget coming.

Yields are what move direction because of recessionary forces and higher inflation reports hence the US mortgage yields/rates rising.

FTB here could have had 4.99% with a fee it 5.04% without a fee I went for the latter, was hoping to see a further drop but I guess that's out of the hat now!

We’ve applied for a five year fix for 3.8. Some people have suggested it might have been wiser to go for a 2-year as rates may drop but I just want the guarantee and not have to think about it again for half a decade.

That was my son's view. 2 years he'd be looking almost as soon as he'd moved in. Well, it would feel like it. 5 years gives him time, knowing his budget, and to save extra to pay more off and possibly bring in a lodger. His aim being to pay another approx 10% down at 5 years.

Fair enough... though I do believe rates are likely to fall further I don't think they will fall that far.

For the peace of mind I can definitely understand people fixing for 5 years if they can secure a rate beginning with a 3.

Considering Santander were reportedly withdrawing their fixed rate products yesterday, anyone that's managed to get 3. has done well

I agree anyone securing a rate beginning with a 3 at the moment has done well (to be fair, only people with bigger deposits are able to access such good rates).

I've provided a link to the article about Santander for anyone interested
Santander 'temporarily' withdraws fixed mortgage deals: Is it a precursor for upping rates?

Santander has temporarily withdrawn a number of its mortgage deals in a further sign that home loan prices may start rising again. From 10pm tonight the bank says it's withdrawing eight fixed rate deals, including its market leading 3.68% five-year fix.

It says it will be relaunching these deals from next Tuesday. However, one mortgage expert suspects the relaunch will come with higher rates.

Nicholas Mendes, mortgage technical manager at broker John Charcol, said: 'I suspect this 'temporary withdrawal' means the lender will pause, review, and re-launch at a higher rate.'

https://www.thisismoney.co.uk/money/mortgageshome/article-13949817/Santander-temporarily-withdraws-fixed-mortgage-deals-precursor-upping-rates.html

The budget cannot bring any good news. It’s going to take money off people who have or earn money (the people who buy houses). It will then be spent, most likely, on repairing the country/services/infrastructure, none of which stimulate economic activity to any noticeable degree.
Furthermore, in my opinion, Rachel changing the fiscal rules to borrow more debt, unless it’s going straight into stimulating the economy, is going to be her Truss moment if it’s not perfectly presented. This will be an interesting budget!

I agree @HellsBalls going to be interesting.

I do however believe the infrastructure needs shit loads of money to be spent on it.

Don’t think Labour can win really, whatever they do. They have inherited a mess from the Tories long rule which would take them more than one term to significantly improve. It seems like their honeymoon period is already over.

I have just fixed for 5 years at 3.95%. I'm well aware that rates are very likely to go down, but they may not go down by that much. Plus I too wanted the peace of mind of not having to think about this for half a decade!

I agree tbh

The infrastructure in this country is on its knees I've travelled over Europe this summer and it's amazing trains work on time and cheap! They're building and stuff just works

Money Week: UK inflation slowed to 1.7% in September

The UK inflation rate has now slowed significantly from its peak, dropping below the Bank of England's 2% target for the first time in over three years in September. The latest Consumer Prices Index (CPI) report showed prices rose by 1.7% on an annual basis in September.

High interest rates have helped bring inflation under control, and the Bank of England is now starting to ease monetary policy constraints as the economy cools. The Bank cut interest rates for the first time on 1 August, bringing some mild relief to mortgage holders and households paying off debts.

Further interest rate cuts are expected in the months to come, after governor Andrew Bailey hinted the Bank of England could become a “bit more aggressive” in its approach. A cut at the next Monetary Policy Committee (MPC) meeting in November now looks highly likely after inflation’s big drop in September. Some experts believe we could see successive cuts in November and December, potentially bringing the base rate to 4.5% by the end of the year.

https://moneyweek.com/economy/uk-economy/uk-inflation-consumer-price-index-release-dates

https://www.forbes.com/uk/advisor/mortgages/2024/10/21/mortgage-updates/

They won’t cut further with yields rising, unless the Fed/BoE follows China and tries to print their way out of it and resorts to QE.

I’m only a layperson, but I’m not seeing any good economic news nor anything positive coming out of the budget. Labour will continue what the Tories were up to, while extracting even more taxes for NHS and environment from mostly working people.
I guess a .25% cut in interest rates in Nov will be lauded, but won’t stimulate any activity in the market.

I definitely think they will cut the base rate at least once this year @Lightscribe surprised if you think they won’t.